New reforms should boost FDI flows

As the world Foreign Direct Investment (FDI) flows fell moderately in 2008, following a five-year period of uninterrupted growth, according to the World Investment Report, Rwanda’s FDI grew by 84 percent.

As the world Foreign Direct Investment (FDI) flows fell moderately in 2008, following a five-year period of uninterrupted growth, according to the World Investment Report, Rwanda’s FDI grew by 84 percent.

The report, which largely attributed the drop to the global economic and financial crisis, says that FDI flow into Rwanda reached $103 million last year, up from $67 million in 2007. This means that there is growing investor interest in the Rwandan economy.

This year’s report has come when Rwanda’s business environment is registering many reforms, which in my opinion, I think have potential to even accelerate FDI flows, foster growth and reducing poverty through job creation.

First, the World Bank’s “Doing Business 2010” report released recently indicates that Rwanda has registered significant progress in creating a business friendly environment.

It ranked Rwanda as the world’s top reformer of business regulation—making it easier to start a business, register property, protect investors, trade across borders and access to credit.

Imports and exports are more efficient, transferring property takes less time, investors have more protection, and insolvency reorganization has been streamlined while a wider range of assets can be used as collateral to access credit.

With the proper and right regulatory environment in place, policies in place, it can be used to bring about more gains in terms of investment inflow in the country.

Secondly, the country’s implementation of the Customs Union Protocol will impact on Rwanda’s customs policy environment, thus helping to increase the flow of international trade and investments.

The decline in global FDI flows is seen as a big challenge for many developing countries, as FDI has become their largest source of external financing.

And for Rwanda to register such massive progress it means that the economy is on the right track to attain prosperity as the impact of FDI on economic growth has been considerably important in the development and economic growth.

The Writer is a Journalist
gahamanyi1@gmail.com

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